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Flat Rate VAT & Capital Goods

SiwCSiwC Registered Posts: 1
My client owns a micro brewery and has purchased casks totalling >£2000 (net) in a single transaction. The casks are supplied full of beer to customers and then returned to the brewery when empty. They appear in the accounts as a fixed asset.

My client is on the Flat Rate VAT Scheme. Am I correct in deciding that this purchase meets the criteria for claiming input tax? The casks remain the property of the brewery at all times and do not generate any business income as they are 'loaned' free of charge.

The following has been copied from HMRC's website..............

>>> 15.1 Definition of ‘capital expenditure goods’ on which input tax can
>> be claimed Normally, capital goods are those goods which are bought to be used in the business but are not used up by it, except through normal wear and tear over a number of years - for example a van, a computer or a bottling machine but not the fuel, printer paper or bottles that go into them.
>> Capital expenditure goods in the Flat Rate Scheme are capital goods that would fall into the above definition, but also specifically exclude any goods bought to:
>> · resell
>> · incorporate into other goods for onward supply
>> · consume (or completely use) within one year
>> · generate business income by being leased, let or hired
>> · goods covered by the capital goods scheme (see paragraph 15.6)
>> Nothing in this section allows a business using the Flat Rate Scheme to reclaim VAT on goods which it would not be able to claim under the normal VAT rules.


  • lja2345lja2345 Registered Posts: 1
    Hi SiwC - yes I would claim the input VAT back, they are capital in nature and fixed asset treatment is appropriate.
    Can you help me? I have a small microbrewery client and they are considering joining the flat rate scheme - which rate is your client on - is it the "category not listed elsewhere"? The closest is Pub but that doesn't seem right to me.
    I would be interested in your comment.
    Thanks in advance
  • rameshakularameshakula Registered Posts: 1
    My company owns a micro-brewery and has, in a single transaction, purchased casks totalling > £2000 (net). The casks are shipped to customers full of beer, and then returned when finished to the brewery. They appear as fixed asset in the accounts.

    My client is on a fixed rate VAT system. Am I correct in determining that this transaction meets input tax claim criteria? The casks remain the brewery's property at all times and produce no business profits because they are 'loaned' for free.
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